California Says Starbucks Has to Stop Stealing Its Workers’ Wages

Michael Arria July 30, 2018

Employees prepare beverages in the first Starbucks coffee shop in Seattle, 30 September 2006. (GABRIEL BOUYS/AFP/Getty Images)

California’s Supreme Court has ruled against Star­bucks in a wage theft case that could have vast impli­ca­tions through­out the state. The July 26 deci­sion estab­lished that employ­ees through­out Cal­i­for­nia should be paid for every minute that they work, includ­ing any tasks that they do after punch­ing out. Although Star­bucks was at the cen­ter of the opin­ion, the rul­ing applies to all employ­ers and could lead to an increase in wage theft lawsuits.

The court’s deci­sion is the cul­mi­na­tion of a law­suit that dates back to 2012. That year, a for­mer Star­bucks shift super­vi­sor named Dou­glas Troester filed a law­suit against the com­pa­ny, on behalf of him­self and all non-exempt Star­bucks employ­ees in the state. Troester claimed that work­ers were reg­u­lar­ly expect­ed to per­form a num­ber of tasks after they were already off the clock and no longer being paid. These tasks includ­ed enter­ing data, bring­ing out­door fur­ni­ture into the store and acti­vat­ing the store’s alarm.

In 2014, California’s fed­er­al dis­trict court grant­ed sum­ma­ry judge­ment in favor of Star­bucks, after con­clud­ing that Troester’s off-the-clock tasks only took between one and four min­utes a day and would be too com­pli­cat­ed to tab­u­late. Troester worked at Star­bucks for 17 months, from 2009 to 2010, and made $8 an hour. The court esti­mat­ed that Troester had lost just over $100 in wages, a num­ber that was not sig­nif­i­cant” and there­fore fell under the fed­er­al Fair Labor Stan­dard Act’s (FLSA) de min­imis doc­trine, mean­ing it’s too triv­ial to war­rant consideration.

The de min­imisdoc­trine stems from the 1946 Supreme Court case, Ander­son v. Mt. Clemens Pot­tery Co, in which work­ers at a pot­tery plant argued that their hours were not being record­ed accu­rate­ly — and the court ruled in favor of the employ­er. When the mat­ter in issue con­cerns only a few sec­onds or min­utes of work beyond the sched­uled work­ing hours, such tri­fles may be dis­re­gard­ed,” read Jus­tice Murphy’s court opin­ion in the 1946 case. Split-sec­ond absur­di­ties are not jus­ti­fied by the actu­al­i­ties of work­ing con­di­tions or by the pol­i­cy of the Fair Labor Standards.”

In hopes of buck­ing this prece­dent, Troester appealed after the dis­trict court’s 2014 rul­ing. The Ninth Cir­cuit Court of Appeals lacked guid­ance on whether the de min­imis defense could be applied under Cal­i­for­nia Labor Code and request­ed the state’s Supreme Court rule on the issue. The July 26 rul­ing — which was unan­i­mous — con­tends that the de min­imis doc­trine doesn’t apply to Cal­i­for­nia labor law. We hold that the rel­e­vant Cal­i­for­nia statutes and wage order have not incor­po­rat­ed the de min­imisdoc­trine found in the FLSA,” wrote Jus­tice Good­win Liu in the court’s opin­ion. We fur­ther con­clude that although Cal­i­for­nia has a de min­imis rule that is a back­ground prin­ci­ple of state law, the rule is not applic­a­ble here. The rel­e­vant statutes and wage order do not allow employ­ers to require employ­ees to rou­tine­ly work for min­utes off-the clock with­out compensation.”

Liu’s opin­ion also reject­ed the dis­trict court’s asser­tion that Troester’s hypo­thet­i­cal extra $100 was insignif­i­cant. That is enough to pay a util­i­ty bill, buy a week of gro­ceries or cov­er a month of bus fares,” wrote Liu, What Star­bucks calls de min­imis’ is not de min­imis at all to many ordi­nary peo­ple who work for hourly wages.”

The court’s rul­ing could have a dra­mat­ic impact through­out the state, forc­ing employ­ers to rethink the way they cal­cu­late hours and increas­ing the amount of class action law­suits from work­ers. Accord­ing to a June 5 study by Good Jobs First and Jobs With Jus­tice, Cal­i­for­nia is actu­al­ly already expe­ri­enc­ing a vast wage theft cri­sis. That report found that U.S. cor­po­ra­tions have paid out $8.8 bil­lion in wage-theft claims over the last 18 years. More than half of those claims came from California.

Star­bucks has devel­oped some­thing of a pro­gres­sive rep­u­ta­tion through­out the years. In 2015, it launched a pro­gram that would cov­er some its employ­ees’ tuition costs and in 2017 it announced that it would hire 10,000 refugees in response to Trump’s trav­el ban. How­ev­er, the com­pa­ny faced wide­spread crit­i­cism this year after one of its man­agers called the police on two black men who were sim­ply sit­ting in one of its Philadel­phia stores, wait­ing for a friend to arrive. 

The long­time face of Star­bucks also seems to oppose key eco­nom­ic mea­sures. Howard Schultz retired as the company’s CEO in 2016 and retired as its exec­u­tive chair­man last month, amid spec­u­la­tion that he might run for pres­i­dent in 2020. It con­cerns me that so many voic­es with­in the Demo­c­ra­t­ic Par­ty are going so far to the left,” he told CNBC in June. I say to myself, How are we going to pay for these things,’ in terms of things like sin­gle pay­er [and] peo­ple espous­ing the fact that the gov­ern­ment is going to give every­one a job.”

Michael Arria is the U.S. cor­re­spon­dent for Mon­doweiss. Fol­low him on Twit­ter: @michaelarria.
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